According to a report by tax-free shopping refund agency Global Blue, UK high streets are lagging behind their European counterparts due to changes in tax-free shopping rules. The report analyzes the spending habits of international tourists in the EU from 2019 to 2021 and reveals that tax-free shopping spend is now being diverted to EU destinations.
The data shows that spending in Continental Europe has increased across all three categories of overseas shoppers. In 2021, 20% of shoppers in the EU had previously only shopped in the UK in 2019, where they spent an average of €24,000 per person annually. However, in 2021, they spent nothing in the UK and €22,000 each in Continental Europe.
Furthermore, 50% of shoppers in the EU in 2021 had only shopped in Continental Europe in 2019 and they have increased their average annual spending per person there by 10%, from €20,000 in 2019 to €22,000 in 2021. The remaining 30% had previously shopped in both Continental Europe and the UK in 2019 but have specifically increased their average annual spending per person in Continental Europe by 40%, from €14,000 in 2019 to €22,000 in 2021.
This decline in tax-free shopping is a cause for concern, especially for the UK retail industry, particularly the luxury, fashion, and beauty sectors. Chief Executive of the Association of International Retail (AIR), Paul Barnes, emphasized the importance of international tourism for the survival of the British retail, leisure, and hospitality industries, stating that international visitors contribute around £28.4 billion annually to the UK economy.
Barnes urged the Treasury to reconsider its decision to abolish tax-free shopping, citing the 20% price advantage that countries like France and Italy now have over the UK. He warned that this disparity is attracting high-spending international tourists towards Continental Europe instead of the UK.
Fraser Brown, Retail & Property Director at Heathrow, echoed Barnes’ concerns, stating that the UK needs to compete more aggressively with its European neighbors who have made their tax-free shopping schemes more attractive to lure visitors away from the UK. Brown called on the government to introduce new incentives to make the UK a more appealing destination for tourists and level the playing field.
Overall, the Global Blue report emphasizes the negative impact of the UK’s changes to tax-free shopping on the country’s retail industry. Without a competitive tax-free shopping scheme, the UK risks losing out on high-spending international tourists to its European counterparts.
Useful links:
1. The Impact of Tourism on the UK Economy
2. Changes to Tax-Free Shopping Rules Threaten UK Retail Industry
